**************** data **********************

Quantity variables are obtained from the National Income and Product
Accounts (NIPA) provided by the Bureau of Economic Analysis and deflated
with the GDP deflator. Government spending comprises consumption expenditure
and gross investment; private consumption is personal consumption
expenditure on non-durable goods and services; investment is gross private domestic investment and personal consumption expenditures on durable goods.
Net exports of goods and services are scaled by GDP. Population figures are also
obtained from NIPA. The real exchange rate is provided by the OECD and
measured in terms of consumer prices (CPI); an increase corresponds to an
appreciation of the domestic currency. The ex ante long-term real interest
rate is constructed from the nominal yield on 10-year U.S. treasuries and a
corresponding time series of 10-year-ahead inflation expectations. The
latter is constructed by combining data from Blue Chip Economic Indicators
(1980Q1-1991Q1), Livingston Survey (1990Q2-1991Q2), and Survey of
Professional Forecasters (1991Q4-2007Q4), all obtained from the Philadelphia
Fed, with linear interpolation for missing quarters in the first part of the
sample. Debt is federal debt held by the public (FYGFDPUN), and T-Bill rate is the quarterly average of the monthly observations (TB3MS), both obtained from the FRED database at the St. Louis Fed. Inflation is measured as the quarterly change of the GDP deflator. Inflation and interest
rates are expressed in percent per quarter. The measure of "forecast errors" computed on the basis of the Survey of Professional Forecasters was kindly provided by Valerie Ramey.



****************  VAR ********************
* MAIN_REC.m: estimates VAR model and computes impulse response functions under recursive identification scheme
* Calls function: estimesIRF and simdata (for bootstrapping)
* MAIN_FE.m: estimates VAR model and computes impulse response functions under forecast error identification scheme
* Us_quarterly contains data in Matlab format
* Data.xls contains data in excel format
* MAIN_REC_sensi.m: estimation results for sensitivity analysis
* MAIN_FE_sensi.m: estimation results for sensitivity analysis

****************  Model ********************
* MAIN_Model.m: main file for model simuations
* calls: IBCmodel.m (model equations), my_solab.m (solves for state space), fitit.m (computes changes in spending necessary to keep taxes constant)





